Fire by Flickr user Amy Glaze

February Reporting Roundup: Market on Fire Edition

It’s time once again for the monthly reporting roundup, where you can read my wry commentary about the news instead of subjecting yourself to boring rehashes of the NWMLS press release (or in addition to, if that’s what floats your boat).

To kick things off, here’s an excerpt from the NWMLS press release:

Favorable weather and restored confidence are propelling home buying activity around Western Washington to the highest level in nearly a decade, according to Northwest Multiple Listing Service sources.

“The pent-up demand being unleashed has rocketed pending sales back to the levels of our record year in 2006,” said Ken Anderson, president/designated broker at Coldwell Banker Evergreen Olympic Realty in Tumwater. Buyers have come off the sidelines, the former MLS director commented, adding “At the same time, homes for sale are near a 10-year low.”

“Listings are flying off the shelf faster than allergy medicine in this early spring market,” quipped MLS director Frank Wilson, the branch managing broker at John L. Scott, Inc. Poulsbo. He said the brisk activity is posing challenges for buyers. “They will probably make several offers before one is accepted and they just need to expect to be competing with others,” he cautioned.

“The housing market is on fire,” said J. Lennox Scott, chairman and CEO of John L. Scott Real Estate. “Due to the backlog of buyers and shortage of homes available for sale, we are experiencing multiple offers on nearly every new listing. This is creating price appreciation where 90-plus percentage of the sales activity is taking place.”

It’s on fire!

Fire by Flickr user Amy Glaze

Read on for my take on this month’s local news reports.

Seattle Times

Sanjay Bhatt: King County home prices up 6% from a year ago

The drought in local homes for sale, combined with heavy demand from buyers, has real-estate brokers openly worrying that the pressure on prices could become toxic.

“We’re to the point now where I’m worried about another bubble,” said Bill Groen, a veteran broker at Keller Williams Realty in Bothell. “I worry about affordability throughout King County and South Snohomish County.”

Trevor Smith, managing broker of Locality Seattle, said he’s concerned when he sees homes that need a lot of work receiving multiple offers.

“It’s important for the buyer to keep their wits about them and not get caught in the frenzy,” Smith said.

Whoa. Agents openly worrying about a new real estate bubble? That’s definitely not in the NWMLS talking points. Good to see Sanjay Bhatt and the Seattle Times pushing beyond the rah-rah press release fluff from the NWMLS, as usual. Such a refreshing 180-degree change from where we were with Elizabeth Rhodes during the last bubble.

Seattle P-I – MIA

Everett Herald

The Herald Business Journal Staff: Bumper crop of buyers despite limited supply of homes

An often warm and sunny February brought out more and more people looking to buy homes, but in a market with fewer properties available.

“Undeniably, our unusual spring-like weather has not only fueled and jump started an early allergy season, but the market as well,” said Diedre Haines, Coldwell Banker Bain’s principal managing broker, in a statement.

Sadly, the Herald’s effort this month is basically just a reprint of the NWMLS press release.

Tacoma News Tribune / The Olympian

C.R. Roberts: Home sales are hot and prices are up as inventory dwindles in Pierce, Thurston counties

Blame the nice weather and the cockeyed optimism that accrues in an economic recovery.

The real estate market is back. Sales are up, Inventory is down and the price of homes has increased.

“The pent-up demand being unleashed has rocketed pending sales back to the levels of our record year in 2006,” said Ken Anderson, president and designated broker at Coldwell Banker Evergreen Olympic Realty in Tumwater.

Buyers, Anderson stated, are leaving the sidelines, while “at the same time, homes for sale are near a 10-year low.”

J. Lennox Scott, chairman and CEO of John L. Scott Real Estate, was more effusive still.

“The housing market is on fire,” he said in Thursday’s NWMLS news release.

“Effusive,” heh.

Puget Sound Business Journal

Marc Stiles: Seattle-area home sales rocket back to 2006-era levels

A new report shows just how hot the Puget Sound region housing market is.

Even though more people are putting their houses and condos on the market, it’s still not enough to keep up with demand, and the inventory of available properties is less than it was a year ago, according to the report on February sales that the Northwest Multiple Listing Service issued Thursday.

This month the Seattle Times was the only local outlet to print much more than a mild rewrite of the NWMLS press release.

(Sanjay Bhatt, Seattle Times, 03.05.2015)
(The Herald Business Journal Staff, Everett Herald, 03.05.2015)
(C.R. Roberts, Tacoma News Tribune, 03.05.2015)
(Marc Stiles, Puget Sound Business Journal, 03.06.2015)


About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.

46 comments:

  1. 1

    These Guys Will say the Blue Sky is Purple

    To get sales in a totally depleted inventory market that is so low, its history making. They even admit inventory is historically low.

  2. 2
    Erik says:

    Woo, I just got back from beating my chest on my deck over the water here in Alkai while I screamed “Who wants to buy this condo!!!!”

    Real estate in Seattle is red hot and I bet it will be for atleast the next couple years, but probably more like 10 years of buyers fighting low inventory and home owners raising prices. Why do you think investors bought here in the Seattle area? Let me tell you why… they know prices are going to increase probably over the next 30 years in Seattle. A lot of the people holding out for more inventory will be beating themselves on the head because us home owners are not willing to take the scrap you offer. We want blood this time. We want a piece of your retirement fund and a sack of loot… arg.

    We were the ones smart enough to realize that low inventory would equate to higher prices. I don’t even know anything about real estate and I can tell you that prices will continue up up up until demand is met met met.

    Below is 3 rocks represented by “o”. Let’s pretend the left side is supply and the right side is demand. As you can see there is a balance.

    ooo———-|———-ooo

    Now, what do you think will happen if we take away supply as we see in the current market and increase demand? See below as I loaded up the cantilever again.

    o———-|———-ooooo

    Without doing any math I will bet you that the left side will lift into the air quickly and be out of balance. How do we get back in balance? We add 2 rocks to the supply side or take 2 rocks off the demand side.

    Tying this back to real estate, in order to decrease demand, there would have to be less new jobs in the area or people would start moving out of Seattle for whatever reason. I don’t see that happening. The more likely scenario is that we add 2 rocks to the supply side. Who wants to add their rock at market value? Not me. Who wants to add a rock to the left side for double market value? I do! See how that works.

    Prices will continue to climb until supply balances out demand. For that to happen housing prices will have to go up.

  3. 3
    Mike says:

    ^ You were predicting 40% declines by summer 2015 back in December 2013. Then you revised it to “declines in 2016 because Ardell said so” and now you’re on to several years of price increases.

    I’ve heard that phrase about a broken clock being right twice a day, but these predictions are more like a broken cuckoo clock. Right and wrong 17 times a day!

  4. 4
    Irrational Exhuberance says:

    I think Seattle is now full swing into a period of irrational exuberance while easy money from the US and foreign governments amplifies the effects. Chinese investors backed by unrealized gains and short term cash flow buying up properties in cash don’t seem realistic in terms of cost of property maintenance.

    I see a huge problem coming in this market if a large employer decides to move offices out of Seattle in the event of multiple risks: skyrocketing cost of living driving up compensation for employees, lack of infrastructure to move people in and around Seattle and finally the weather.

    Yes you read that right – weather. If the rain comes and by that I mean a rainy summer – what do you think the foreign investors are going to do? What do you think happens when China starts becoming more open and when they get their act together cleaning up the environment.

    Housing cannot keep appreciating at the current rates — 600k for homes all the way past Issaquah make no sense. The market is irrational and the media irrational along with it.

    I suggest a sense of reality to put downward pressure on the market to bring it in line with reasonable pricing. In short — the buyers need to push back and haggle and socially ever more so to get the prices back down.

  5. 5

    RE: Irrational Exhuberance @

    You Hit the Hammer Carnival Game So Hard

    You rang the bell. A snippet:

    “…Repeat foreclosures are when a home has been in the foreclosure process once, was somehow saved by either a loan modification or payment program, but then goes back into foreclosure. This can happen when the borrower either can’t or won’t keep up with the new payments. New repeat foreclosures rose 11 percent in January from December and accounted for more than half of all new foreclosures, according to Black Knight Financial Services….”

    http://finance.yahoo.com/news/housings-worry-repeat-foreclosures-return-150124380.html?bcmt=1425932283183-3f0c5ec8-eb88-412e-bd8d-3cde42febce9&bcmt_s=u#mediacommentsugc_container

    Of course low buyer demand in a historically low inventory market means high prices. But are they realistic? Is it a good long-term investment? Also, this repeat foreclosure mess drastically increasing 11% Month to Month, is worse in higher priced neighborhoods than $200K American average priced homes…like Seattle. Even Eric admitted the buyers are handing the “flipper pirates” their retirements, buying now.

  6. 6
    boater says:

    I think appreciation can keep going but it’s unhealthy. Seattle needs to provide incentives to massively increase condo development in Seattle if it truly want home owners of all incomes to live within city limits. It’s current approach of using linkage fees to create low cost housing is going to have a San Francisco result of a city with ultra wealthy and low income only.

    I don’t think it will happen since most people are very tied to the idea of SFH’s but that’s not possible since we can’t make more land.

  7. 7
    Mike says:

    By softwarengineer @ :

    Of course low buyer demand in a historically low inventory market means high prices. But are they realistic? Is it a good long-term investment? Also, this repeat foreclosure mess drastically increasing 11% Month to Month, is worse in higher priced neighborhoods than $200K American average priced homes…like Seattle. Even Eric admitted the buyers are handing the “flipper pirates” their retirements, buying now.

    You keep repeating this but there’s still no evidence that the foreclosures happen more often on higher priced neighborhoods. All the actual evidence – actual foreclosure resales – tend to be in lower priced neighborhoods and or lower priced houses in general. A very simple reason for this is that on average neighborhoods that are selling in the top tier have a lot fewer houses underwater. Struggling borrowers can sell rather than do a short sale or go into foreclosure. Lower tier neighborhoods on the other hand haven’t appreciated or held their value as well, so fewer borrowers have the option of doing an equity sale if they need to move. If you have evidence that the trend is opposite, please feel free to share it.

    As for the repeat foreclosures – that was planned. The majority of rate/term loan modifications weren’t intended to keep people in their homes indefinitely, just to slow down the flood of houses onto the market. Early estimates I saw were that about 70% of the loan modifications were expected to fail eventually because they didn’t actually get the borrowers back into a stable financial situation. Interestingly, the principal reduction modifications tended to go to borrowers with more expensive homes. Those modifications tend to me a lot more successful since they reduce overall debt. Few low tier owners were offered that option.

  8. 8
    Blurtman says:

    Soon even the most humble cottage on the Eastside will go for over $1 million. Everyone will be making an above average wage. And the Jets will win the Super Bowl.

  9. 9

    RE: Mike @

    You Think Seattle is Somehow Special in Regards to Foreclosures?

    I think expensive neighborhoods in Seattle mask their existence by not listing them, of course neither of us can prove either alternative point, the banks do it in secret.

    Foreclosures have everything to do with unaffordability of mortgages and are equally spread throughout the Seattle area due to sickness, unemployment and bad investments. That is a fact you cannot argue with. I’ll throw you a bone though, foreclosures can be mitigated in Seattle high priced neighborhoods due to “cash bag” purchases and the fact much of the high priced buyers simply don’t have skin in the game, no job and no mortgage. The Yin and the Yang of that fact is high priced Seattle property taxes, maintenances, home owner association fees [especially Condos] and insurance can easily add up to $2000+/mo alone [with no mortgage [payment]. If you think those monstrous bills can’t cause a old retired Seattle home owner to slip into foreclosure, I have a bridge I can sell ya….

  10. 10
    m-s says:

    Umm, I guess you did do it without using math. In your illustration, to get them back in balance, you add 4 rocks to the supply side or take 4 rocks off the demand side. Or take 2 from demand and then transfer them to supply.

    RE: Erik @

  11. 11

    RE: softwarengineer @

    hmmm…only $2,000? How are you defining “high priced”?

  12. 12
    Rita says:

    RE: boater @ – @ Boater – It is sad that Seattle officials seem to think “new” construction is the cat’s meow and want all these people to live in-city. Those of us born and raised here, often wonder why there isn’t an incentive to offer corporations a discount for hiring people with a Seattle address, instead of encouraging all this traffic to jam into a tight space.

    For example – In the 1980’s I worked in mortgage banking in Bellevue and had to schlepp across the lake to go to work. I wouldn’t do that today. If I lived in Renton, Kent or further south, you can be sure I’d be looking for jobs that direction, rather than driving to Seattle or even to Everett (as many Boeing plant people do) just to have a job. I have a friend who is driving from Steilacoom to Bellevue. Isn’t that nuts? Let Tacoma get developed for more jobs.

    The other thing I’ve noticed is the feeling of not being wanted in the city any more as a more mature person.. (I’m 50 btw.) Housing built with multiple levels (just wait until you or your loved one has knee issues!), are just not suited for the empty nesters. Equally frustrating, is having these boxes built immediately next door to your home so that it towers over your yard and privacy. We are losing the cute small homes to developers with cash who can TOTALLY change the character of the neighborhood from 1930/40’s bungalows to the crass boxes, AND they get the support of city officials!

    @ Everyone ~ If the city wants to encourage micro living downtown for all those upwardly mobile folks who often come from other countries to work here (i.e Amazon) and more densely populated cities of the U.S., fine. Then downtown will be nothing but a canyon of buildings and a place many of us will no longer visit due to parking issues. (As a Broker, imagine MY difficulty showing condos with streets closed/construction and no-parking zones.) Views of our beloved Lake Union, Olympic Mountain range, Space Needle, etc. are all going by the wayside in the city’s effort to encourage all this rat-packing. If we, the community want to keep our vintage single family homes, there should be space and encouragement for that too.

    The prices rise and fall and it’s cyclical. In all my years here, I have not ever seen them fall back far enough. The prices frequently seem to be that juuuuust little bit out of range for some folks. Now it sure seems to be all the developer money and cash from outside the country flooding here, that is causing the greed and profit taking by owners leaving here. I for one, have asked my husband, “If we sell, where do we go? It’s not like we can easily trade up any more.”

    Think about your own family – When grandma needs to move to a place more suited to her physical needs, it’ll be a retirement home or an apartment because she, at age 60-80 will not be able to afford anything on her income. Good luck finding her something she CAN afford, within the city limits. Guess it’s a good thing the value of her home is her nest egg.

    Yes on the employer comment. “If” or “when” one of the major employers has a stumble, that could shake things up again. So could a war or an earthquake. (wink) Amazon, Vulcan and others seem to be pretty embedded in the community. They’d probably leave for lack of income or too many state taxes, yes? At least there is diversity of employers and we aren’t relying just on Boeing or Paccar any more.

    Thanks for sharing opinions, you guys. This is SUCH an interesting conversation and I appreciate everyone’s input! Drink a brew this weekend for me…

  13. 13
    Scotsman says:

    Someone’s going to get burned! On the other hand I’ve seen the little 1,100 square foot ramblers on 7,000 square foot lots in San Jose, etc. regularly going for $1.0M+. It’s the old normal there. Can the $1.2+M Ballard box be that far off?

  14. 14
    Mike says:

    RE: softwarengineer @ – Well, after spending the last 3 years living in a somewhat higher priced neighborhood I’m definitely not seeing what you’re seeing – And believe me, I’m looking.

    I’ve seen neighbors sell for financial reasons (moved to Shoreline and paid cash for a more modest house there) One neighbor was foreclosed after cashing out $500K in equity from a house she inherited then was unable to make payments after losing her Real Estate license due to an undisclosed theft conviction (go figure). Most of the other sales have been due to job transfers and metaphysical transformations (estate sales). The other ‘in place’ owners are pouring money into remodels – the neighborhood is a minor construction zone, a mini version of the high rise construction in nearby Ballard and Greenwood.

    The new neighbors are mostly 30-something couples buying in the upper 6 figures. If there’s a foreclosure crisis going on it’s very well hidden. Occasionally a few neglected bubble era purchases hit the market, but at this point most owners are able to sell well into equity unless they’re 5 years behind on payments.

    By Ardell DellaLoggia @ :

    RE: softwarengineer @

    hmmm…only $2,000? How are you defining “high priced”?

    Seriously. That’s slightly less than I’m averaging in maintenance and repairs each month on one of these old places. (In addition to the mortgage and utilities of course). These 1950’s houses aren’t cheap to keep up, even if you can buy one for under $600K.

  15. 15
    boater says:

    RE: Mike @
    The reason you’re not seeing it is because it isn’t happening. There isn’t anything in SE’s post that makes sense. Foreclosures are not evenly distributed across all incomes and geographic regions uniformly. There are strong correlations between poverty and health which hits his sickness comment. Unemployment is not evenly distributed across professions and incomes.

    How can a cashbag buyer have no skin in the game?

    No intelligent person can be taxed or maintenance feed into foreclosure. Sure it could become over time more expensive but if the taxes are going up it’s because the value ia going up. Any sane owner would sell at a profit and move vs just be ground into debt such that they have to be foreclosed on.

    I swear the more i read SE’s post the more I’m inclined to think he’s a automated troll ala Rob Pike’s old usenet days.

  16. 16
    Erik says:

    RE: Mike @
    You seem like you are in a bad mood and you are lashing out.

    As more information came in I changed my mind. That is usually how this prediction thing works.

  17. 17
    Mike says:

    By Erik @ :

    RE: Mike @
    You seem like you are in a bad mood and you are lashing out.

    As more information came in I changed my mind. That is usually how this prediction thing works.

    No it’s not. When you’re out of work and drowning in debt you went negative and figured that your personal situation would crash the market in general. Then you get a wad of cash and a job and all of a sudden the market turns sharply the other direction. You’re not the market – the market didn’t go through any significant changes at the time your personal situation changed – it just plodded along the same general path it has been on for the past 3+ years.

    Take a step back and look at the big picture. It hasn’t fluctuated anywhere near as wildly as your perceptions have.

    By boater @ :

    RE: Mike @
    The reason you’re not seeing it is because it isn’t happening. There isn’t anything in SE’s post that makes sense. Foreclosures are not evenly distributed across all incomes and geographic regions uniformly. There are strong correlations between poverty and health which hits his sickness comment. Unemployment is not evenly distributed across professions and incomes.

    How can a cashbag buyer have no skin in the game?

    No intelligent person can be taxed or maintenance feed into foreclosure. Sure it could become over time more expensive but if the taxes are going up it’s because the value ia going up. Any sane owner would sell at a profit and move vs just be ground into debt such that they have to be foreclosed on.

    I swear the more i read SE’s post the more I’m inclined to think he’s a automated troll ala Rob Pike’s old usenet days.

    I’ll agree there. Even my most insane neighbor that lives in isolation and spends all day listening to conservative talk radio is doing extremely well financially. He may “think” Obama is taxing him out of his house, but it hasn’t actually happened.

  18. 18
    Erik says:

    RE: Mike @
    You are being mean still. I was scared that the market could turn, so I cashed in my chips. I wanted to buy something near the job center in case something bad happened. Maybe I was just being paranoid because it looks like nothing bad is going to happen? I am pretty sure that real estate will continue to go up in Seattle for the next couple years based on low supply.

  19. 19
    Deerhawke says:

    Re: Scotsman @

    “Can the $1.2+M Ballard box be that far off?”

    Too late! One already pending and one already sold.

    https://www.redfin.com/WA/Seattle/7316-12th-Ave-NW-98117/home/61440135

    https://www.redfin.com/WA/Seattle/7312-12th-Ave-NW-98117/home/498254

  20. 20
    Mike says:

    RE: Erik @ – Boo Hoo. Pull up some of my old posts and call me out. I won’t be crying in my condo.

  21. 21
    Erik says:

    RE: Mike @
    And yes, I bought super low, invested hardly anything, and sold for over 2-1/2 times what I paid. That’s a pretty great ROI. I will probably have a difficult time repeating that one, but I hope something good happens. I need that monorail to West Seattle to turn the tide on my current remodel.

    Your scenario is nothing like what I thought. I read this site daily and bought after The Tim did cause he said it’s near the bottom and he actually bought. I got lucky and my area boomed after I bought, so I sold it and moved to a condo over the water on Alki Beach, which is way better than that Kirkland area in my opinion. Not sure why you are being so rude, but I just read what’s on here and talk smack so I can try to buy and sell at the right times. Since being engaged in this website I have made great decisions in my opinion. Maybe you haven’t been so lucky so you are attacking us commenters?

  22. 22
    Erik says:

    RE: Mike @
    Boo hoo. Hahaha. You are using grade school tactics.

    Sticks and stones will break my bones, but words will never hurt me.

    I am rubber, you are glue. Bounces off me and sticks to you.

  23. 23
    boater says:

    RE: Rita @
    I think you misunderstand the problem. It’s not a case of the city wanting everyone here its that everyone wants to be here and the city government has to either let the city be only for the wealthy or figure out how to make it affordable for the non wealthy. There is only so much land in the city. If we say you can’t build hi rise condos you will only have wealthy people in the city. There just won’t be enough housing stock to let median income folks live here. Go look at San Francisco. They have the protection for old housing, insane design review etc. It doesn’t end up well for the middle class.

  24. 24
    Mike says:

    By Deerhawke @ :

    Re: Scotsman @

    “Can the $1.2+M Ballard box be that far off?”

    Too late! One already pending and one already sold.

    https://www.redfin.com/WA/Seattle/7316-12th-Ave-NW-98117/home/61440135

    https://www.redfin.com/WA/Seattle/7312-12th-Ave-NW-98117/home/498254

    I checked out 7316 at one of the open houses. Very nice place, although the front door they chose didn’t seem like it belonged on a $1.2M home. Minor complaint though, I just couldn’t figure out why the builder put something like that in on an otherwise top notch home.

    Also, why no roof top deck for these places? Access stairway would exceed the height limit?

  25. 25
    Irrational Exhuberance says:

    By Scotsman @ :

    Someone’s going to get burned! On the other hand I’ve seen the little 1,100 square foot ramblers on 7,000 square foot lots in San Jose, etc. regularly going for $1.0M+. It’s the old normal there. Can the $1.2+M Ballard box be that far off?

    No because we saw what happened to Detroit — nothing lasts forever. Look at the suck from Irvine, CA to Texas. I know because several software/hardware firms already have or are in the process of moving out of Irvine due to expenses.

    San Francisco has the weather and so does Irvine — just wait till it starts raining for a summer. It’s unsustainable.

  26. 26
    Irrational Exhuberance says:

    Our city’s economy is not as diversified as we think — it’s very tech centric. Detroit was very auto centric. The wonderful thing about all these .com startups is that these companies can startup anywhere, anyone with a computer can do it if they have the time to do so and communities can change.

    Five to ten people can do a crazy run up in a new software company – fifteen seems to be a magic number. Bigger companies come to Seattle for talent but I think there is a drought of talent now, these companies are really fighting for people and cannot get them fast enough and then use this to justify cheap foreign labor. It’s a mess! Laws are getting abused.

    These companies cannot find labor because they want to be able to not find labor here, they want foreign workers and will do anything to make it happen. So move to Seattle which attracts tech and then go to congress and say you can’t find anyone that can work in Seattle.

    Don’t get me started — I can go on and on with market distortions in Seattle. DC went through this when there was a contractor craze during privatization — Seattle is going through a growth phase, there is an arbitrage scenario playing out where those with wealth can play the winning hand, it’s reality, but sooner or later it’s going to come to a close and who loses? The people that bought into it and didn’t sell fast enough as well as people stuck with sky high tax assessments that don’t come down to reality.

    Wait till other cities with better weather (not so the last two years, just wait) want to cash in on the tech craze but had been too slow to slow to catch up.

    RE: Rita @

  27. 27
    James Wilson says:

    Just sold my place in Kirkland for something in Issaquah. Selling was the fun part (obviously) +30% what I paid, but holy cow. Buying was a nightmare!

    Not just the bidding wars, pre-inspections, etc. but dealing with lenders, escrow companies, and inspectors who are WAY overbooked right now juggling all the refinancing for all the other folks.

    No doubt this is a huge contributor as to why the inventory is so low right now. Had I been going about my normal routines/every day life, I would have been too overwhelmed and just stayed put!

    If interest rates do ever go up, I suspect many more people will be able to sell since they won’t have to deal with this as much. Though some of the experts say that increased interest rates shouldn’t impact housing prices, I think there is an exception in Seattle’s case, as it might alleviate the inventory issue. But who really knows.

    To anyone trying to buy right now: godspeed

  28. 28
    wreckingbull says:

    RE: Mike @ – Sshhh. Don’t divulge his predictive model, “What is good for Erik at the moment is what will transpire on Erik’s timeline.” It has been rather entertaining to watch over the last few years, although I admit I have moved on.

  29. 29
    James Wilson says:

    RE: Irrational Exhuberance @ – Though Seattle is primarily tech, there is a diversity of jobs available in this sector which was unseen in motor city. Detroit was heavily dependent on one company, let alone jobs that were unskilled and easy to fill someplace else.

    The difference with Seattle is that skilled workers adapt (e.g. some Software Engineers today actually studied Psychology) and companies like Space-X, Facebook, Google are coming and growing in the area to tap into the agile workforce.

    The fact that UW is nearby and produces some of these skilled workers also makes it different from Detroit in my opinion.

    If you want to see a large city without career diversity, check out Las Vegas, where casino/gaming is king. And if that failed, it could become the next Detroit (and almost did during the Great Recession!)

  30. 30
    David B. says:

    RE: boater @ – Hear, hear! One still sometimes hears rhetoric about “Californication”. Well, the “oppose housing growth at all costs” camp, despite their stated goal of wanting to keep Seattle as it is (or was), are (ironically enough) the people whose policies are actually doing the most to “Californicate” the housing market here.

    If you restrict housing growth while allowing (or, worse yet, actively encouraging) job growth, housing will only continue to get less and less affordable. It’s simple supply and demand.

  31. 31
    Erik says:

    RE: wreckingbull @
    You’ve ourgrown me in your 70’s.

  32. 32
    Erik says:

    RE: James Wilson @
    Good observation. Areas that aren’t diversified crash harder and potentially recover very quickly. That’s why I left the eastside, because it’s all computers. I am wary of computer people. They are shifty.

  33. 33
    boater says:

    By James Wilson @ :

    RE: Irrational Exhuberance @ – Though Seattle is primarily tech, there is a diversity of jobs available in this sector which was unseen in motor city. Detroit was heavily dependent on one company, let alone jobs that were unskilled and easy to fill someplace else.

    The difference with Seattle is that skilled workers adapt (e.g. some Software Engineers today actually studied Psychology) and companies like Space-X, Facebook, Google are coming and growing in the area to tap into the agile workforce.

    They adapt within their ability to adapt. In that what Seattle is much like Detroit in it’s prime. Both are producing good workers for their respective industries. The strength of the region builds on itself by having a good university, lots of support industries to tech and that supports new innovations. If we see some radical change that does to the software engineer what robots and automation did to the auto industry Seattle could see trouble.
    I do think the unions and the auto companies in the 70’s forgot their was a global market and neither did a great job of adapting to those changes. Right now the tech companies in Seattle are still competing and competitive in a global market. If that changes then Seattle will have issues just like Detroit. I have to say having both very highly skilled manufacturing like Boeing and tech companies is a great combo to have in any city.

    Dot coms can start anywhere but so many more choose to start themselves in a expensive tech heavy cities. There’s a reason for it. It’s much easier to find the talent you want for one. You are much likelier to find a positive exit strategy if people know about you and that’s a lot easier if there is a whole ecosystem around what you do where you do it.

    It also helps that people just like living in a coastal city with so much to do within a short drive.

    The tech companies didn’t come here because we didn’t have tech workers. They came here because we did have the workers and they didn’t want to move to San Francisco or Mountain View or NY. At some point most of the high tech companies base in other cities run out of qualified candidates in their cities. They look around at other cities and try to find ones with large pools are very talented people and Seattle-Bellevue-Redmond is one of those areas. What they find is they can’t pay those people enough to work at their headquarters and are forced to open an office in the greater Seattle area if they want those workers. Think about that for a second. Even offering an individual who is making $250k at Microsoft $350-400k to move to SF isn’t enough enticement for them to move. What’s even more amazing is many of those folks living in Seattle wouldn’t quit Microsoft to go to another company located in Bellevue or Kirkland for the same pay increase. The only thing that could motivate those folks to leave was to shorten their commute to Redmond by opening offices in Seattle instead of Bellevue/Redmond/Kirkland. If you think that’s fiction it’s not. I was in those meetings when I worked in tech. It’s why you saw a sudden move of all the major tech companies to have offices in hot areas of Seattle around 2006-7. No reasonable/unreasonable amount of money could make people move. Only a quality of life change could get the top performers from shifting from one company to another. And that is following through into housing prices.

    Those top performers have never seen their demand decrease. Getting a pool of them in a single area is a self perpetuating cycle. The best want to work with the best because it’s kind of annoying to work with the rest for them. I’m glad that right now Seattle is still attracting the best because if that changes you’ll see problems.

  34. 34
    Joe M says:

    RE: Erik @

    “shifty” Heh heh. Funny. Dangling laminated ID card, face in a phone. Expression of contempt when they do look up. Welcome to the neighborhood.

  35. 35

    Why do Many Real Estate Bull Bloggers Say

    My scientific proof is a handful of “neighborhood examples” prove without a doubt that all is fine and a stagnant total non farm employment base the last 7 years since the Great Recession can absorb the foreign over-growth anyway? Amazon doesn’t hire a mass quantity of low paid $10/hr warehouse workers [you know the Amazon that just boxes and ships for a living] to rent the $2200/mo one bedrooms in Seattle, all Amazon hiring is $200K/yr tech workers. Then state SWE is shooting from the hip?

    Look at where your real estate bull’s gun smoke is coming from…..by your belt buckle.

  36. 36
    Saffy The Pook says:

    By softwarengineer @ :

    Why do Many Real Estate Bull Bloggers Say

    My scientific proof is a handful of “neighborhood examples” prove without a doubt that all is fine and a stagnant total non farm employment base the last 7 years since the Great Recession can absorb the foreign over-growth anyway? Amazon doesn’t hire a mass quantity of low paid $10/hr warehouse workers [you know the Amazon that just boxes and ships for a living] to rent the $2200/mo one bedrooms in Seattle, all Amazon hiring is $200K/yr tech workers. Then state SWE is shooting from the hip?

    Look at where your real estate bull’s gun smoke is coming from…..by your belt buckle.

    I’m starting to agree with the “SWE is a bot” theory, except I think the bot is writing in Chinese and piping its output to Google Translate for posting.

  37. 37

    RE: Saffy The Pook @
    I’m With Erik

    I’m sure there’s differing opinions between those with a gigantic “Seattle Mortgage Noose” around their necks and those of us that are debt free on real estate price predictions….I can understand that. Bot name calling…..LOL….IMO that cements it, never trust a name caller’s opinions. They apparently have no facts or evidence to support their dream theory, so this tactic proves they’re shooting from the hip.

    At least Erik, my favorite Seattle Flipper, is honest and admits he got lucky. I did too, the super cheap foreclosure I grabbed up last October with a “smallish cash bag” simply plopped on my lap. Would I bid on a Seattle area bank owned HUD home [there’s one in my neighborhood sitting empty for two years] or go to the auctions to bid against the rich elite; as the prices there become “not cheap” anymore [especially adding in unknown staging costs]? Hades no.

  38. 38
    Mike says:

    RE: softwarengineer @ – Well, if there’s one thing I’ve learned that is is your goal is to live in a nice upscale area, that’s what you should buy. If your goal is to live in a rougher area in an inexpensive home with no mortgage, you should buy in a nice upscale area that is in high demand.

    The stark reality is that most everyone was in decent financial shape, put 20% down and bought in a high tier area over the last 3-4 years could now sell and pay cash for a house in a low tier neighborhood. Think about that – 3 years and their ‘SWE-approved” shack in the South county is totally paid for and then some.

  39. 39
    Blurtman says:

    I don’t want to seem snobbish, but the higher income areas seem to have less overt crime. Not saying embezzlement, financial fraud, drug labs and other questionable income generating activities are not common, just saying that folks are usually more discrete and prefer no publicity. And the area’s offerings typically cater to the wants and needs of these folks, usually meaning decent restaurants, good schools, boutique shops, etc.

    I have often thought of getting a place on several acres and raising some llamas. I’d have to find a Topanga canyon equivalent in WA state.

    No, the world on a string
    Doesn’t mean a thing.
    It’s only real in the way
    That I feel from day to day.

  40. 40
    David B. says:

    RE: Blurtman @ – “I have often thought of getting a place on several acres and raising some llamas. I’d have to find a Topanga canyon equivalent in WA state.”

    There’s no shortage of upscale hobby farms on Bainbridge Island. Vashon has that element, too, to a lesser degree.

  41. 41

    RE: Mike @

    It is or at least was common in the Bay Area in CA for people in menial jobs, like garbage collectors, who bought their homes when they first started working and homes were cheap, to sell them and buy further North in an Upper Middle Income neighborhood, all cash…and become day traders. I observed this back in the late 90’s. Anyone who has owned their upscale neighborhood home for a very long time, usually cashes in the appreciation and moves to a very good neighborhood in a much cheaper place, vs trading down to a high crime area.

  42. 42
    Erik says:

    RE: Blurtman @
    Eastside is pretty nice. The computer nerds on the eastside do start to wear on me after a while. The thing I love about my alki is that the computer people haven’t polluted this area yet.

    I moved from north everett to kirkland which felt like getting out of prison. I loved that area mostly because I lived in tacoma and everett previously, which made every day less happy for me.

    Probably more crime over here in alki, but I would take a few more robberies and domestic violence incidents just so I don’t have to constantly have those nasty programmers in my face. Sammamish has an older computer nerd crowd, so they aren’t out pestering people. Kirkland has the younger computer nerd crowd, which is annoying.

  43. 43
    Saffy The Pook says:

    By softwarengineer @ :

    RE: Saffy The Pook @
    I’m With Erik

    I’m sure there’s differing opinions between those with a gigantic “Seattle Mortgage Noose” around their necks and those of us that are debt free on real estate price predictions….I can understand that. Bot name calling…..LOL….IMO that cements it, never trust a name caller’s opinions. They apparently have no facts or evidence to support their dream theory, so this tactic proves they’re shooting from the hip.

    At least Erik, my favorite Seattle Flipper, is honest and admits he got lucky. I did too, the super cheap foreclosure I grabbed up last October with a “smallish cash bag” simply plopped on my lap. Would I bid on a Seattle area bank owned HUD home [there’s one in my neighborhood sitting empty for two years] or go to the auctions to bid against the rich elite; as the prices there become “not cheap” anymore [especially adding in unknown staging costs]? Hades no.

    This is the most cogent post you’ve made in some time, thanks for making the effort. As for Erik, I’d like to see him think for himself rather than take his cue from the oracle of the month. It would help if there was one thread where he didn’t brag about his Kirkland flip offer bigoted stereotypes of software developers.

    The comments on this site used to offer as much insight as The Tim’s own efforts. Sadly, the former has degenerated.

  44. 44
    Erik says:

    RE: Saffy The Pook @
    I don’t know what you are talking about when you say the “Oracle of the month.” Please explain. This is me for myself. I got lucky on that Kirkland one and I’m trying to continue that luck. The one before that I bought in dirty north everett and it was a huge failure if me admitting that makes you feel better about yourself.

    I think you have trouble hearing the truth. I am not kidding when I say living around computer programmers makes life less fun. They usually aren’t happy fun bubbly people. It gets old when everyone is kind of an unoriginal downer. I am speaking the truth. I prefer the computer people over the ghettos, but they both have a downside.

  45. 45
    Mike says:

    By Erik @ :

    RE: Blurtman @
    Eastside is pretty nice. The computer nerds on the eastside do start to wear on me after a while. The thing I love about my alki is that the computer people haven’t polluted this area yet.

    I moved from north everett to kirkland which felt like getting out of prison. I loved that area mostly because I lived in tacoma and everett previously, which made every day less happy for me.

    Probably more crime over here in alki, but I would take a few more robberies and domestic violence incidents just so I don’t have to constantly have those nasty programmers in my face. Sammamish has an older computer nerd crowd, so they aren’t out pestering people. Kirkland has the younger computer nerd crowd, which is annoying.

    I’ll point out that one of the keys to getting a good resale price in the Seattle market is having a property that appeals to high income people working in the tech industry. They’re generally the ones spending $600K+ on starter homes. If you picked your current place because it’s in an area generally shunned by the high paid techie workers with the intention of reselling at a profit, you sort of shot yourself in the foot. That’s a personal preference of yours but it’s akin to “over personalizing” the property in a way that might turn off buyers. Maybe you’ll find a hippie with a trust fund to sell to.

    As someone that watches the market in my neighborhood of $600K+ starter homes, the buyers are mostly tech money. Google, Amazon, Microsoft, start-up owners etc… If I sell my house, it’ll probably go to some Bay Area transplant with a kid or two. That obviously isn’t your ideal neighbor or buyer but their cash is green, and they’re the ones who have buckets of it.

  46. 46
    Erik says:

    RE: Mike @
    I’d like to disagree with you just because you have been mean to me lately, but I think you could be correct on this one. I was thinking that since south lake Union is doing great and alki is not far away, alki may get popular.

    I’ll attack a computer place next time.

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